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U.S. Securities and Exchange Commission

Securities Act of 1933
Section 2(a)(1)

October 18, 2006

Response of the Office of Chief Counsel
Division of Corporation Finance


Fidelity Life Association
Incoming letter dated October 17, 2006

Based on the facts presented, but without necessarily agreeing with your analysis, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion of counsel that membership interests in Members Mutual are not securities within the meaning of the Securities Act or the Exchange Act, Fidelity Life causes its current and future policyholders to become members of Members Mutual in connection with and after the Reorganization without registration under the Securities Act or the Exchange Act.  Capitalized terms have the same meanings you define in your letter.

In reaching this position, we particularly note that:

  • the Reorganization will be effected under Illinois law permitting the formation of mutual insurance holding companies by mutual insurance companies;
  • membership rights in Members Mutual will be substantially the same as rights in Fidelity Life;
  • with the Reorganization, Fidelity Life's policyholders will automatically become members of Members Mutual;
  • the Reorganization is subject to approval by the Illinois Director after notice to policyholders and a public hearing at which policyholders are entitled to appear;
  • the Illinois Director will approve the Reorganization only after finding that it is fair and equitable to Fidelity Life's policyholders;
  • Members Mutual will be subject to regulation by the Illinois Director at a level substantially equivalent to that applicable to Fidelity Life before the Reorganization; and
  • Members Mutual will not pay dividends or make other distributions or payments of income or profits, except in the event of a dissolution or liquidation of the company, or as otherwise approved by the Illinois Director.

This position is based on the representations made to the Division in your letter. Different facts or conditions might require a different result. This response expresses the Division's position on enforcement action only and does not express any legal conclusions on the questions presented.


Kim McManus
Special Counsel

Incoming Letter:

The Incoming Letter is in Acrobat format.


Modified: 10/19/2006